In the latest list, Sri Lanka is ranked 79, four notches up from 83rd position previous year.
The latest accolade comes soon after IFC-World Bank annual Ease of Doing Business Index placed Sri Lanka as among world’s ten most improved nations. Sri Lanka claimed South Asia’s highest spot in the global ease of doing business ranking, at 81 out of 185 economies.
Forbes determined the Best Countries for Business by grading 141 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.
Forbes leaned on research and published reports from the following organisations: the Central Intelligence Agency, Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, World Bank, and World Economic Forum.
New Zealand ranks first on our list of the Best Countries for Business, up from No. 2 last year, thanks to a transparent and stable business climate that encourages entrepreneurship.
Denmark emerged second, followed by Hong Kong and Singapore placed at number 4. Last year’s number one Canada had slipped to fifth position this year losing ground on innovation and technology.
The US placed second in 2009, but it has been in a steady decline since.
This year it ranks 12th, down from No. 10 last year. The US trails fellow G-8 countries Canada (No. 5), United Kingdom (No. 10) and Australia (No. 11).
In Forbes commentary on Sri Lanka, it said Sri Lanka is engaging in large-scale reconstruction and development projects following the end of the 26-year conflict with the LTTE, including increasing electricity access and rebuilding its road and rail network.
Additionally, Sri Lanka seeks to reduce poverty by using a combination of state directed policies and private investment promotion to spur growth in disadvantaged areas, develop small and medium enterprises, and promote increased agriculture.
High levels of Government funding may be difficult, as the Government already is faced with high debt interest payments, a bloated civil service, and historically high budget deficits. The 2008-’09 global financial crisis and recession exposed Sri Lanka’s economic vulnerabilities and nearly caused a balance of payments crisis, which was alleviated by a $ 2.6 billion IMF standby agreement in July 2009.
The end of the civil war and the IMF loan, however, have largely restored investors’ confidence, reflected in part by the Sri Lankan stock market’s recognition as one of the best performing markets in the world.
Sri Lankan growth rates averaged nearly 5% in during the war, but increased Government spending on development and fighting the LTTE in the final years spurred GDP growth to around 6-7% per year in 2006-08. After experiencing 3.5% growth in 2009, Sri Lanka’s economy is poised to achieve high growth rates in the post-war period.